Seven West Media announces full year results

SEVEN WEST MEDIA (SWM) today announced its 2012 full-year financial results at a presentation for media professionals and analysts in Sydney. The SWM panel included Managing Director and Chief Executive Officer, Don Voelte and CEO WA Media Assets, Chris Wharton, Chief Sales & Digital Officer, Kurt Burnette, Chief Financial Officer, Peter Lewis, CEO Television Tim Worner, CEO Pacific Magazines, Nick Chan, and Chief Operating Officer, Rohan Lund.

The West Australian increased Monday to Saturday audited circulation by 0.2 per cent for the June 2012 quarter, making it the only metropolitan newspaper to achieve a lift during that period.

But a persistent soft advertising market saw The West Australian and regional newspapers suffer losses in advertising revenue; A$264.8 million down 6.5 per cent from the previous year. Total newspaper revenue was also down 5.2 per cent, also reflecting difficulties in the advertising market.

The company held cost growth to 1.8 per cent which helped offset 1.2 per cent decline in circulation revenues to A$68 million.

The West Australian and regional newspapers returned earnings before interest, taxation, depreciation and amortisation (EBITDA)  of $137.2 million and EBIT of A$116.2 million on revenues of A$348.4 million.

Total company EBITDA were A$535.0 million with pre-income tax profit of A$325.2 million, and revenue of A$1,937.1 million.

The results are in line with the market guidance, updated on 16 July to account for Seven’s A$440 million capital raising exercise with shareholders to reduce debt. Direct comparisons with the previous full year earnings are difficult due this being the first twelve months of complete trading following West Australian Newspapers Holdings’ acquisition of Seven Media Group in April last year.

At the presentation Mr Voelte welcomed three new directors to the Seven West Media board: Dr Michelle Deaker, a managing partner of Australian venture capital firm OneVentures, Mr David Evans, the executive chairman and managing partner of investment advisory company Evans and Partners Pty Ltd, and Mr Ryan Stokes, the chief executive officer of Australian Capital Equity Pty Limited, and with director positions at Seven Group Holdings, WesTrac, Consolidated Media Holdings, Yahoo!7 and Iron Ore Holdings.

At the conference, Mr Voelte said the Seven’s newspaper assets remained strong with full year results reflecting the strength of every part of its business.

“One business is not carrying the others. We don’t have a hidden bad company in there. All are running number one or two in their respective industries,” Mr Voelte said.

“Our newspapers came in with a 39 per cent margin – a leading margin on a global basis for that interest. Our boys have done a very good job guiding their craft in not just choppy water but stormy water. Our management boys are keeping their businesses running.” Mr Voelte said.

Tim Warner alluded to the News of the World scandal saying issues at Fairfax Media and news had “haunted” Seven West Media, coupled with a soft advertising market, he said the year “kept us on our toes”.

“The challenge is to identify and understand various factors that combat our revenue streams. Our digital platforms where we leverage our printed platforms are all performing very well in the West Australian market and we continue to use them to enhance our advertisement offering.” Mr Warner said.

“For past four years I’ve talked about our focus on cost and profit margins. For us that’s the name of the game. I’m happy with how we’ve managed cost and our margins are good. Our initiatives in news print supply have crystallised our savings.” Mr Warner said.

At question time Mr Wharton denied Seven West Newspapers had plans to introduce pay-walls but said he would not rule it out in the long term, as a potential revenue raising strategy.

According to Mr Wharton, 2013 will see a focus on the value of quality local content. He said major newsroom restructures are planned to achieve better efficiency and synergy across content delivery, and to maximise digital technology. It was unclear whether the changes will affect both television and newspaper newsrooms.

Mr Voelte said Seven would address cost savings by looking at what parts of the business have been affected by structural changes, and which were cyclical.

“Our magazine and newspapers guys are looking at the data. We don’t want our readers to notice a thing or to change quality.” Mr Voelte said.

Seven West Media reported net assets of A$2.6 billion. The past 12 months also saw the company successfully re-finance all existing group debt into the one facility with overall pricing.

Seven West Media panel members were: Managing Director and Chief Executive Officer, Don Voelte, Chief Sales & Digital Officer, Kurt Burnette, Chief Financial Officer, Peter Lewis, CEO Television Tim Worner , CEO WA Media Assets, Chris Wharton, CEO Pacific Magazines, Nick Chan, Chief Operating Officer, Rohan Lund.